How IRS firings are expected to screw up tax season

Yahoo

21-02-2025

The IRS terminated probationary workers this week, claiming those let go weren't "critical" to tax filing season.
The IRS has already been understaffed in recent years, resulting in delays in processing tax returns and customer service.
One expert said there's no way to cut a substantial number of workers without impacting filing season.
Your tax return may languish on an empty desk at the Internal Revenue Service this season after the agency began firing workers this week.
An internal IRS email viewed by Business Insider said the agency would terminate probationary workers — typically those who have been at the agency for less than a year — who were not "critical" to tax filing season.
Tax experts and IRS employees told BI they expect the terminations to result in delayed tax refunds, slower customer service, and a backlog in paperwork processing. Some spoke to BI under the condition of anonymity.
Natasha Sarin, a professor at Yale Law School, told BI that there's "no way, in the middle of filing season, to cut a substantial number of IRS employees without having an impact on filing season," adding it's an "all hands on deck" time at the IRS.
Many Americans still file paper tax returns, a human resources worker at the IRS said, adding, "If there's not anyone there to process them, it's just going to be sitting."
A former Treasury official likened it to a business "eliminating your entire accounts receivable department," adding, "No business would say we have no interest in collecting the revenue that's due to us."
The IRS and DOGE did not immediately respond to a request for comment. Kevin Hassett, director of the White House National Economic Council, told reporters on Thursday that the estimated 3,500 firings "is a small number and probably you can get bigger, especially as we improve the IT at the IRS." He also said that not all IRS employees working on taxes were "fully occupied."
In the wake of the pandemic, the underfunded and understaffed IRS struggled with a backlog of millions of returns, taking months to process them and causing economic hardship for taxpayers.
Sarin, who served as counselor to previous Treasury Secretary Janet Yellen, said that the terminations could throw the IRS back into the "dark ages." Taxpayers should be concerned about whether they'll be able to get in touch with the IRS, whether refunds will be processed in a timely manner, and if the IRS website will malfunction during tax season.
A fired IRS worker said that "the long-term ramifications of this will be felt for decades."
"There will continue to be processing delays due to incredibly outdated systems, and there will not be supported free filing for Americans due to budget cuts and lobbying by major tax software players," the worker said.
"It's just going to slow the IRS down," one IRS worker who still has a job at the agency said, adding, "It's a shame that all the progress is going to reverse."
They're referencing increased funding from the Biden administration's Inflation Reduction Act, which was meant to mitigate staffing issues. Bolstered by IRA funding, hiring at the IRS in recent months focused on tax evasion and fraud detection staff.
Vanessa Williamson, senior fellow in Governance Studies at Brookings Institution and the Urban-Brookings Tax Policy Center, said during a press call on Thursday that the expected terminations could "disproportionately affect enforcement."
"When you underpay and understaff the IRS, the agency doesn't have the power or the resources it needs to go after wealthy tax evaders with their high-priced lawyers," Williamson said.
"It's going to be incredibly harmful to efficiency at the IRS," the former Treasury official told BI. If the agency can't keep up with existing efficiency programs — like using AI to target audits better — compliance will be less effective, they said.
Over the past couple of weeks, a range of federal agencies have fired their probationary employees as part of President Donald Trump's efforts to slash government spending by reducing the federal workforce. BI previously spoke to over half a dozen fired workers at agencies, including the US Department of Agriculture and the Department of Energy, who said they're planning to fight their terminations.
"We're not going to take this lying down," Melanie Mattox Green, a fired US Forest Service worker, told BI. "We all love our work and we're planning on fighting and getting our jobs back."
The IRS HR employee said that these terminations, coupled with the federal hiring freeze, could put the IRS behind on its functions into next year.
"If you have filed, or will file a tax return, you are going to feel an impact," they said.
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